HC Deb 17 February 1987 vol 110 cc542-3W
Mr. Hirst

asked the Chancellor of the Exchequer if he will make a statement on the outcome of the latest meeting of the European Community Budget Council.

Mr. Brooke

The Budget Council met in Brussels on Thursday 12 and Friday 13 February for further discussion on the 1987 Community budget. I represented the United Kingdom.

The Council reached agreement by qualified majority on new proposals for the 1987 budget which provide for total expenditure of some 37.4 billion ecu in commitment appropriations and some 36.3 billion ecu in payment appropriations (£23.5 billion and £22.8 billion respectively.

All conversions are made at the 1987 budget exchange rate of 1.5939 ecu to the £.).

The proposals leave some 660 mecu of headroom inside the 1.4 per cent. VAT ceiling.

On agricultural guarantee expenditure, the Councils 'proposals continue to respect the budget discipline guideline limit. The Council has committed itself to reach decisions as soon as possible on Commission proposals for implementing the Agriculture Council's decisions on 16 December 1986 concerning the milk and beef sectors and on proposals which the Commission is to put forward shortly about covering the rest of the overrun of agricultural expenditure foreseen during the current year.

On non-obligatory expenditure, the Council agreed to accept the proposals for increases in individual lines voted by the European Parliament at its December plenary on the basis that these would be offset by negative reserves of 181.1 mecu (£114 million) for commitment appropriations and 88.9 mecu (£56 million) for payment appropriations. The Council's proposals assume that the Parliament will commit itself to making the necessary transfers and reductions in substantive budget lines in good time before the end of the year so as to extinguish the negative reserves and ensure that the budget totals for non-obligatory commitment and payment appropriations are respected. On payment appropriations, the Council's proposals continue to respect the maximum rate of increase. On commitment appropriations, the Council decided to exceed its November second reading proposals by some 5.2 mecu (£3 million) on the basis that the actual rate of increase over 1986 of 8.1499 per cent. when rounded to one decimal place would still be consistent with the 8.1 per cent. maximum rate. The Council also stated its intention to carry forward into 1987 some 22 mecu (£14 million) of associated non-obligatory commitment and payment appropriations not used in 1986.

I argued at the Council that, given the severe financial problems of the current year, the Community could riot afford to increase substantive provision on individual payment appropriation lines even if the increases were offset by a negative payment reserve. While acknowledging that significant shortfalls of expenditure were virtually certain to occur on individual lines and could be used to extinguish the negative payments reserve, I argued that any such savings should be kept in hand in case they were needed to deal with the estimated deficit of over 800 mecu (£502 million) carried forward from 1986 or the large threatened overrun in agricultural guarantee expenditure. I argued also that it would be more prudent to make specific provision in the Financial Regulation to govern and limit the use of negative reserves before including them in the budget. On behalf of the United Kingdom, I voted against the Council's proposals on these grounds, even though the totals stick closely to budget discipline. The other Member states all voted in favour.

The Belgian presidency will present the Council's proposals to the Parliament's plenary in Strasbourg this week.